Get 2 days of unlimited access
Textbook Notes (270,000)
US (100,000)
UMD (1,000)
BMGT (200)
Chapter 1

BMGT 110 Chapter Notes - Chapter 1: Nonprofit Organization, Customer Service, Outsourcing


Department
Business and Management
Course Code
BMGT 110
Professor
Hutchins
Chapter
1

This preview shows pages 1-2. to view the full 8 pages of the document.
lChapter 1: Taking Risks and Making Profits within the Dynamic Business Environment
Entrepreneurship and Wealth building
Success in business is based on constantly adapting to the market
● Business- any activity that seeks to provide goods and services
to others while operating at a profit
To earn profit, you must provide desired goods, jobs and services to
people in the area
Based on consumer wants and needs
● Goods- tangible products ex. computers, food, clothing, cars
● Services- intangible products ex. education, travel, tourism
■ Entrepreneur- a person who risks time and money to start and manage a
business
Revenues, Profits, and Losses
■ Revenue- total amount of money a business takes in during a given
period by selling goods and services
■ Profit- amount of money a business earns above and beyond what it
spends for salaries and other expenses to run the operation
■ Loss- occurs when a business’ expenses are more than its revenues
Business environment is constantly changing
Matching Risk with Profit
■ Risk- chance an entrepreneur takes of losing time and money on a
business that may not prove profitable
Those that take the most risk may make the most profit
Big risks → big profits
Standard of Living and Quality of Life
Wealthy businesses pay taxes that help everyone in the community
A nation’s businesses are part of an economic system that contributes to
the standard of living and quality of life for everyone
Standard of living- the amount of goods and services people can
buy with the money that have
Quality of life- refers to the general well-being of a society in
terms of its political freedom, natural environment, education,
health care, safety, amount of leisure, and rewards that add to the
satisfaction and joy that other goods and services provide
Maintaining a high quality of life requires the combined efforts of
businesses, nonprofit organizations, and government agencies
More money businesses create → more potential to
improve the quality of life for everyone
Responding to the Various Business Stakeholders
■ Stakeholders- all the people who stand to gain or lose by the policies
and activities of a business and whose concerns the business needs to
address

Only pages 1-2 are available for preview. Some parts have been intentionally blurred.

Stockholders, customers, surrounding community,
environmentalists, dealers (retailers), employees, government
leaders, suppliers, media, bankers
Primary challenge for organizations is to recognize and respond to the
needs of their stakeholders
Ex. The need for the business to make profits may be balanced
against the needs of employees to earn sufficient income or the
need to protect the environment
Ex. Ignore the media and they may attack the business with
articles that hurt sales
To stay competitive, businesses may need to outsource
● Outsourcing- contracting with other companies (often in other
countries) to do some or all of the functions of a firm, like its
production or accounting tasks
Serious consequences in some states where jobs have
been lost to overseas competitors
Ex. China
■ Insourcing
Many foreign companies are setting up design and production
facilities in the U.S
Korea-based Hyundai operates design and engineering in
Detroit, Michigan, and produces cars in Alabama
Creates many new U.S jobs
Helps off-set those being outsourced
Using Business Principles in Nonprofit Organizations
Nonprofit organizations make a major contribution the welfare of society
Nonprofit organization- an organization whose goals do not
include making a personal profit for its owners or organizers
Public schools, civic associations, charities (Salvation
Army), groups devoted to social causes
Social entrepreneurs- people who use business principles to start and
manage not-for-profits and help address social issues
Entrepreneurship v. Working for Others
Two ways to succeed in business
Rise through the ranks of large companies (work for others)
○ Advantages-
Someone else takes the entrepreneurial risk
Provides benefits such as paid vacation time and
health insurance
Become an entrepreneur
○ Disadvantages-
Riskier path
No benefits
You're Reading a Preview

Unlock to view full version

Only pages 1-2 are available for preview. Some parts have been intentionally blurred.

○ Advantages-
Freedom to make your own decisions
■ Opportunity
■ Wealth
The Importance of Entrepreneurs to the Creation of Wealth
Factors of production- resources used to create wealth
● Land
Natural resources
Used to make homes, cars, and other products
Labor
○ Workers
People have always been an important resources in
producing goods and services, but now many people are
being replaced by machines
Capital
Machines, tools, buildings
Means of manufacturing
● Entrepreneurship
Resources have little value without entrepreneurs that are
willing to take the risk of starting businesses to use those
resources
● Knowledge
Information technology has revolutionized business,
making it possible to quickly determine wants and needs
and to respond with desired goods and services
What makes rich countries rich today is a combination of
entrepreneurship and the effective use of knowledge
Entrepreneurs use what they've learned to grow their businesses
and increase wealth
Economic and political freedom also contribute
Business environment either encourages or discourages
entrepreneurship
The Business Environment
Business environment- consists of the surrounding factors that either
help or hinder the development of businesses
Economic and legal environment
Freedom of ownership
Contract laws
Elimination of corruption
Tradable currency
Minimum taxes and regulation
Technological environment
Information technology
You're Reading a Preview

Unlock to view full version